Insurance – Business Insurance Requirements
When a salon or barbershop is opening for business, there are a million things to get ready from purchasing stock to the fit-out of the premise. The last thing you are likely to be concerned with is arranging insurance. To make the process of selecting and obtaining the appropriate insurance cover easier, Rothbury Insurance, H&BNZ’s insurance partner, have outlined the various covers available and a brief explanation for each of them.
Material Damage Insurance –
This is known also as Business Assets Insurance.
This cover protects your stock, fit-out, contents and equipment from sudden, unexpected incidents which harm or destroy your assets. Stock is valued at the price you purchase the goods not at the price you sell the goods. The figure required for insurance purposes is the highest value of the stock that you would have in the salon in any one month of the year. Beware of policies which say, for example, $1 million cover. At the time of claiming, the insurance company will want an inventory and proof of the actual worth of your stock/assets and will certainly not be paying out $1 million. If the actual value of your stock is significantly less than the limit of cover (e.g. $1 million), then you may be paying too much in premiums for the insurance product that you are receiving. Always keep an inventory of all your business assets, because, in the event of a claim, it will speed up the process of claiming.
This is also referred to as Loss of Profits Insurance.
If your salon is closed or interrupted at any time because of fire, flood, arson or other sudden unexpected events, this policy will protect your profit and your ability to start trading again. It will pay wages and other fixed expenses which you have insured. As business interruption is not an expensive insurance, it pays to be accurate with the business figures that you provide to the insurer in order to calculate the amount of insurance cover provided. To claim for business interruption insurance there has to be a claim against your business assets. The exception to this is in the extensions to the policy wording. It is very important that the cover includes a power interruption or public utilities being switched off. It also must include road closure and prevention of access to the salon.
Salon Liability Package
This liability package has been especially written for the H&BNZ because about 10 years ago we realised that while ACC covers a client for absolute fault from an accident caused by your salon and subsequent accident from a treatment given by your salon, it does not cover your client for the first week’s salary and only pays out 80% of the salary. This means that a client can issue civil court proceedings against a salon owner seeking compensation for distress and lost earning caused by the salon owner’s alleged negligence. Below is a brief summary of the different types of insurance cover that are available and how they might be useful to you.
1. Public Liability
This covers the salon and salon owner against legal liability for unexpected and unintended damage to property or bodily injury to third parties. An example would be a tap being left on and water seeping into a neighbouring building and damaging the other party’s flooring. Always ensure that any tradesmen you have working in your premises have their own public liability insurance.
2. Punitive and Exemplary Damages
This covers claims made by or on behalf of a person who is not your employee, who has suffered personal injury resulting from something which happened in connection with the business of the salon. (Claims under this cover are made by people who believe the salon should be punished by the Court for outrageous conduct. Such claims are over and above cover provided by ACC or your Public Liability policy.)
3. Employers Liability
This covers the cost of defending claims by an employee against the employer where negligence is alleged or Breach of Duty causing injury or illness, where ACC cover is not available to the employee. It also covers awards made against the employer in respect of compensation.
4. Statutory Liability
This covers the cost of defending legal claims and any defence related expenses where any member of the public accuses the salon of a breach of any Act of Parliament in force at the time of claiming.
5. Professional Indemnity
This insures the Salon against loss resulting from claims made against the Salon which arise from an alleged breach of professional duty. This policy covers the legal costs and any compensation awarded in the event of proven harm to a person, caused by negligent conduct, breach of professional/trade standards, defamation, or disparaging comments/material.
6. Business Accident and Sickness
This insures your key person/s for their wages in the event they cannot work for up to 52 weeks because of sickness or injury. The waiting period for being paid is 7 days for sickness and immediately for an accident. The money is paid out tax free as it is not a life product. This product is unique in the market place. It covers hairdressers up to age 65 and the premiums are part of the group package.
How to claim in the event of an Accident/Incident
(only if you have taken out an insurance policy):